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Absorption Rate: Interpreting the Numbers

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Absorption Rate: Interpreting the Numbers

Pricing a home accurately is a critical factor in the home selling process. The right price depends on the current absorption rate in your market. Absorption rate is the number of months it would take to sell the number of homes currently on the market. That sounds like easy math, and it is for the most part. This concept is used by many real estate related businesses to predict home prices and sales activity of the future. 

A six-month supply of homes on the market is a balanced market. This is when the number of buyers equals the number of homes for sale. More than a 6-month’s supply is considered to be a buyer’s market and those numbers below 6 months present a seller’s market.

As you can see from the graphs, Cedar Falls has been on a wild ride in a seller’s market for most of 2017. This would explain the houses selling faster than some buyers can get an offer written. This is not a market for the unrepresented buyers—you need a REALTOR® to get you that home you want before “Not You” is living in that home.

Waterloo started off the year with a surplus of homes, a buyer’s market, and took a couple of drops and hikes to end the second half of the year at a steady market for sellers and buyers.

The 2017 Real Estate market was consistent in numbers of sales, sales prices, days on the market for sellers and buyers.

The 2017 Real Estate market was consistent in numbers of sales, sales prices, days on the market, and absorption rates. It was a fair market for buyers and sellers, a great personification of our great state and heritage.

The experts predict that the housing market will remain very strong, driven by the increase in households and household incomes. The market restriction that may affect the 2018 market is low inventory. Overall, you can expect a small increase in number of sales and home prices.

Currently there is a 3.6-month supply of homes in Waterloo and a 2.5-month supply of homes in Cedar Falls.